The following case will continue the discussion of data ethics, which will greatly impact how you

work with and interpret data. Read the following case background and share your thoughts on the

questions below.

Case Background: Fred and Tamara, a married couple in their $30$s$,$ are applying for a business loan to

help them realize their long$-$held dream of owning and operating their own restaurant. Fred is a highly

promising graduate of a prestigious culinary school, and Tamara is an accomplished accountant. They

share a strong entrepreneurial desire to be 'their own bosses' and to bring something new and

wonderful to their local culinary scene; outside consultants have reviewed their business plan and

assured them that they have a very promising and creative restaurant concept and the skills needed to

implement it successfully. The consultants tell them they should have no problem getting a loan to get

the business off the ground. For evaluating loan applications, Fred and Tamara's local bank loan officer

relies on an off$-$the$-$shelf software package that synthesizes a wide range of data profiles purchased

from hundreds of private data brokers. As a result, it has access to information about Fred and

Tamara's lives that goes well beyond what they were asked to disclose on their loan application. Some

of this information is clearly relevant to the application, such as their on$-$time bill payment history. But

a lot of the data used by the system's algorithms is of the sort that no human loan officer would

normally think to look at$,$ or have access to$-$including inferences from their drugstore purchases about

their likely medical histories, information from online genetic registries about health risk factors in their

extended families, data about the books they read and the movies they watch, and inferences about

their racial background. Much of the information is accurate, but some of it is not. A few days after

they apply, Fred and Tamara got a call from the loan officer saying their loan was not approved. When

they ask why, they are told simply that the loan system rated them as 'moderate$-$to$-$high risk.$\text{'}$ When

they ask for more information, the loan officer says he doesn't have any, and that the software

company that built their loan system will not reveal any specifics about the proprietary algorithm or

the data sources it draws from, or whether that data was even validated. In fact, they are told, not

even the system's designers know how data led it to reach any particular result; all they can say is that

statistically speaking, the system is 'generally' reliable. Fred and Tamara ask if they can appeal the

decision, but they are told that there are no means of appeal, since the system will simply process their

application again using the same algorithm and data, and will reach the same result. Questions $($answer all of the following questions in the text box below in complete sentences$)$:

$(1)$ What ethically$-$significant harms might Fred and Tamara have suffered as a result of their loan denial? $(2$ points$)$

$(2)$ What are the ethically$-$significant benefits of banks that use a data$-$driven program to evaluate loan applications? $(2$ points$)$

$(3)$ Beyond the impacts to Fred and Tamara, what broader harms to society could result from the widespread use of the data$-$driven program to evaluate loan applications? $(2$ points$)$